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Summary
Debt Settlement is a process to settle your debts with the creditors. With debt settlement, a third party or you negotiate with your creditors to come up with a reduced debt that you agree to pay. The reduction is usually between 30-60% of the total original debt amount.

Attributes of Debt Settlement
Debt Settlement programs provide you with many options to help settle your debt. This option can reduce your principal debt amount, eliminate your late fees, lower your APR and provide you the flexibility to repay your debts within your chosen time span.

• Principal debt amount: Most debt settlement firms negotiate with your creditors and reduce the principal debt amount you owe. For example, in maximum cases 40-60% of the original debt amount is reduced.
• Late fee charges: Some debt settlement firms can help waive your late fee charges. Quite often late fee and overlimit charges can total to be a substantial portion of your debt. Thus the elimination of these late and overlimit fees can save hundreds or thousands of dollars.
• Annual Percentage Rate (APR): Some debt settlement programs focus on helping you reduce the high APR's for a particular account or set of accounts.
• Monthly installments: Debt settlement programs also focus on the amount you pay on monthly installments. In this process you have to pay a single monthly amount to a debt settlement firm in order to settle your debts. The more you can pay the smaller period of time required for you to take to settle your debt. The amount of your monthly installment is fixed by the debt settlement company based on your present financial status.
• Annual time frame: A frequent approached used by debt settlement companies is to make use of extended repayment time periods. In such cases you have the option to extend your time period from 2 - 4 years or in some cases even longer time frames. This may be a viable option for people who cannot afford to settle the amount at one time.

Costs Involved
Very early on in dealing with any debt settlement company ask to understand all fees they plan to assess. It is very important to check out if there are any hidden fees involved in the settlement process. On an average the charge of these debt reduction firms range from 8%-15% of the total outstanding debt.

Some Useful Tips

• Before contacting a debt settlement firm ensure to contact your bank or lender, and see if you can work out an arrangement.
• As always be cautious of companies that promise you too much at little or no cost. Like any real debt solution working to bring your finances under control will take time and effort.